REAL PROPERTY LAW
Frederick B. Skillern
Montgomery, Little & McGrew, P.C.
Greenwood Village
BOUNDARY / ADVERSE POSSESSION
Welsch v. Smith
113 P.3d 1284 (Colo. App. 2005)
Colorado Court of Appeals, May 5, 2005
2005 Colo. App. LEXIS 680, 2005 WL 1039028
Adverse possession; prescriptive easement; permissive use.
Welsch brought a claim against Smith for trespass, and Smith asserted a counterclaim
based on adverse possession. The trial court concluded that Smith’s possession was
permissive, and ruled for Welsch. This finding is reversed. A presumption of adversity
arises when both property owners believe that a fence has marked the true boundary of
the property for the statutory period. The prior owner of plaintiff’s land had not objected
to Smith’s fence for more than eighteen years. Further, Smith’s removal of the fence on
Welsch’s request -- after the running of the statutory period -- does not necessarily
overcome the presumption of adversity as a matter of law. Finally, the court holds that
permissive use does not need to be raised in the pleadings as an affirmative defense to an
adverse possession claim because permissive use is simply the opposite of hostile and
adverse use.
Sleeping Indian Ranch v. West Ridge Group
119 P.3d 1062 (Colo. 2005)
Colorado Supreme Court, September 12, 2005
Adverse possession; claim to vendor’s adjacent property; equitable conversion.
Can a vendee under an installment land contract adversely possess other (and adjacent)
land owned by his vendor? No, says the Supreme Court, reversing the court of appeals.
This was predicted. However, the court takes more than ten pages to work through the
complicated facts and the applicable law, and draws a dissent by the chief justice.
Essentially A conveyed a large parcel to B under the terms of an installment land
contract. B, prior to acquiring legal title, conveyed forty acre parcels to C, D and E, under
verbal installment land contracts. C takes possession more than eighteen years prior to
trial, and builds a cabin. C’s cabin encroaches on land retained by B. The trial court
found, consistent with the obvious equities, that C could have title to the land occupied
by it for more than eighteen years, and that it would not have to move the cabin. While
one cannot adversely possess land being purchased from his contract vendor, because the
entry by the vendee is permissive, not “hostile,” the same reasoning does not apply to
adjacent land of the vendor to which the vendee has no legal or equitable right. The fact
that a portion of the eighteen-year period of adverse possession ran while the vendor was
itself a contract vendee is immaterial, since a contract vendee is considered the equitable
owner of property under the doctrine of equitable subrogation. An equitable owner of
property has standing to sue, and may assert a claim for adverse possession of adjoining
land. The chief justice, in dissent, argues that adverse possession could not occur here
because both vendor and vendee were part of a joint venture to acquire the lands in
question from a distant vendor. However, the trial court found, with record support, that
no joint venture or partnership existed, and the majority stood by the trial judge on this
point.
CONDEMNATION
Kelo v. City of New London, Conn.
125 S. Ct. 2655, 162 L.Ed.2d 439 (June 23, 2005)
U.S. Supreme Court, June 23, 2005
2005 U.S. LEXIS 5011, 2005 WL 1469529
Eminent domain; public purpose; private development; non-blighted land.
The U.S. Supreme Court, in a 5-4 decision, cites with approval a series of prior cases
granting deference to legislative judgments regarding whether a city or state’s
development plan serves a “public purpose” under the Takings Clause of the Fifth
Amendment. See, e.g., Berman v. Parker, 348 U.S. 26 (1954). Certiorari was granted to
determine “whether a city’s decision to take property for the purpose of economic
development satisfies the ‘public use’ requirement of the Fifth Amendment.” New
London’s economic revitalization plan included seven parcels that would contain a
waterfront conference hotel, restaurants, office and retail space, a marina, a “river walk,”
new residences organized into an urban neighborhood, a U.S. Coast Guard Museum and
other such uses. In order to convert this property the city was able to negotiate the
purchase of most of the real estate in the area, but failed with respect to petitioners in this
case. Homeowner-petitioners, owners of single family homes not subject to “blight,”
asked the Court to adopt a bright-line rule that economic development does not qualify as
a public use. The Court refuses to do that, and holds that the comprehensive development
plan serves a public purpose if it creates jobs, provides for increased tax revenue, and if it
is designed to create a “better balanced, more attractive community” in the judgment of
local authorities, even if some individual properties are not blighted. The Court outlines
factors to be weighed in the future, but provides no bright-line rule. The dissents are
particularly vigorous and provide for good reading.
Department of Transportation v. Marilyn Hickey Ministries
Colo. App. October 6, 2005
2005 Colo. App. LEXIS 1598 (Colo. App. October 6, 2005)
Eminent domain; damage to the remainder; damage for loss of view into property;
inseparability doctrine.
This condemnation case involves a partial taking of property in connection with T-REX.
The taking involved a portion of the Marilyn Hickey Ministries property for a light rail
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line, expanding the former I-25 right-of-way, and construction of a concrete retaining
wall. The retaining wall blocks the view of the church from motorists who are traveling
on I-25. Marilyn Hickey Ministries sought recovery of damages for this loss of visibility
into the property as a part of the damage to the remainder of its property. The trial court
excluded this evidence in an in limine hearing, and the evidence of this category of
damage was not heard by the commissioners who heard the valuation hearing. The
general test for recovery of damage to the remainder is that the property owner should be
compensated for “all damages that are the natural, necessary and reasonable result of the
taking.” La Plata Electric Association v. Cummins, 728 P.2d 696 (Colo. 1986). The
court of appeals holds that any reduction in property value based on a loss of view into
the property naturally, necessarily, and reasonably resulted from the construction of the
concrete wall on the land that was taken. However, the court agrees with CDOT that the
“doctrine of inseparability” should not apply to allow the property owner to recover for
damages to the remainder cause by the construction of the concrete wall on the land of
adjoining property owners. The court of appeals notes that while numerous other states
have applied the doctrine of inseparability as an exception to the general rule of recovery
of damages to the remainder of the owner’s property, the Colorado Supreme Court in a
1917 decision interpreted our eminent domain statute to exclude damages resulting from
“what is done outside of the land condemned.” In short, damages to the remainder must
be those “which result from the taking of the land condemned.”
E-470 Public Highway Authority v. Kortum Investment Company
Court of Appeals, August 11, 2005
121 P.3d 331 (Colo. App. 2005)
Eminent domain; attorney fees.
In the second case to interpret our new statute allowing a landowner to recover attorney
fees in a condemnation action or a final award “equals or exceeds one hundred thirty
percent of the last written offer given to the property owner prior to the filing of the
condemnation action.” The court of appeals holds, applying the literal wording of the
statute that a landowner is entitled to recover attorney fees if the final award exceeds one
hundred thirty percent of the last written offer before the filing of the action, even if
subsequent written offers are made after the action is brought, and after the petition is
amended to add additional property to the claim. The court distinguishes the holding of
another panel of the court in E-470 Public Highway Authority v. Wagner, 77 P. 902
(Colo. App. 2003). In that case, the court awarded attorney fees on a pro rata basis where
the condemning authority amended its petition to reduce the amount of property taken.
To determine whether attorney fees were to be awarded, the court compared the final
award with the original offer on a pro rata basis. The court here concludes that the
attorney fee award is not limited to those fees incurred before the “last written offer made
shortly before trial – an interpretation of the statute adopted by the trial court.
Accordingly, the case is reversed and remanded to the trial court for a full award for all
attorney fees, including attorney fees on appeal.
Factually, E-470 sought to acquire fee title to 14.1 acres, and a “permanent multi-use
easement” for an additional 5.6 acres. Before trial, E-470 tendered a final written offer to
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purchase this property and the easement for $101,880. As the case progressed, E-470
raised its offers, finally making an offer for $257,500. Shortly before trial, E-470
amended its petition to acquire the entire property in fee, and tendered a “new last written
offer for $237,745. This offer was rejected, and the property owner obtained an award of
$247,650 at trial. The court of appeals here applies the “pro rata” reasoning in Wagner,
saying that the last written offer before the case begins ($101,880) “constitutes the
standard against which entitlement to attorney fees must be measured. The court then pro
rated that offer by applying the fee simple valuation to the entire parcel, reasoning that
the same pre-trial offer for a fee simple interest would have been $118,873. Since this
was less than half of the ultimate award, landowners get all of their reasonable attorney
fees C.R.S. § 43-4-506(1)(h)(ii)(B). They also get fees on appeal C.A.R. 39(a). This
statute now surfaces as a significant tool in the arsenal of the property owner facing
condemnation.
CONSTRUCTION / MECHANIC LIEN / WARRANTY
Hoang v. Monterra Homes (Powderhorn) LLC
Colorado Court of Appeals, February 24, 2005
2005 Colo. App. LEXIS 252, 2005 WL 427936
Comprehensive general liability policy; exclusions; garnishment of builder’s
insurer; earth movement exclusion.
Hoang and others obtain a large judgment against a builder (Powderhorn). Prior to entry
of the judgment, Powderhorn’s liability insurer files a declaratory judgment action in
another court seeking to avoid liability on its comprehensive general liability policy
issued to Powderhorn for a period of years that overlap the construction in question.
Hoang nevertheless serves a writ of garnishment on the insurers. The matter came before
the original trial court on plaintiff’s traverse of the insurers’ denial of liability. The trial
court denied the insurers’ requests for discovery, allowing only some interrogatories, and
pushed the hearing on a tight schedule. Because of some signs that the trial court was
biased, the court of appeals gives a thorough and very helpful analysis of the typical
exclusions that are raised in construction cases dealing with a CGL policy. Consequently
this case presents a good primer for reviewing that policy, which can appear arcane to the
uninitiated—not unlike title policies, one might say. The court reviews the law on what is
an “occurrence” and an “accident” within the policy; the latter turns on whether it is the
“knowledge and intent of the insured” to cause the harm. Recovery is barred only if the
insured intended the damages. The court reviews the “known loss” doctrine, and
thoroughly discusses the “earth movement” exclusion, finding that it does not apply in
this case, which deals with expansive soils under residential construction. However, this
exclusion was only included in the policies that applied for the last three of five years at
issue. This does not have much effect on the judgment, as most damages were
apportioned by the judge into the first two years. The court holds that the trial court has
discretion to allocate damages in a manner appropriate to the case, though the
presumption is that an even allocation is proper if a reasonable allocation cannot be made
on the facts of a case.
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Compass Bank v. The Brickman Group, Ltd.
Colorado Supreme Court, March 7, 2005
107 P.3d 955 (Colo. 2005)
Mechanic lien; blanket lien; equitable apportionment.
Can a mechanic lienor file a lien for the entire amount due to it against fewer than all of
the properties benefited by its work? Yes, if the court equitably apportions the benefit
obtained by properties released from the lien. The court holds, over a dissent, that the
apportionment need not be described in the lien statement as a condition of perfecting the
lien. Compare C.R.S. § 38-22-103(4) (authorizing blanket lien against all properties
benefited) with C.R.S. § 38-22-109 (statement of amount due). The case is remanded “to
attempt an equitable apportionment of the outstanding debt.”
SMLL, L.L.C. v. Peak Nat’l Bank
Colorado Court of Appeals, March 24, 2005
111 P.3d 563 (Colo. App. 2005)
Administrative suspension of entity; statute of limitations; remedial revival statute.
SMLL files a lawsuit against various parties involved with the construction and financing
of its (unsuccessful) construction project. The trial court dismisses the action because
SMLL (a limited liability company) had been suspended by the secretary of state for
failure to file an annual report. The trial court finds that SMLL is incompetent to transact
business in the state and therefore has no capacity to sue under C.R.C.P. 17. SMLL files a
second action after being reinstated by the secretary of state. The trial court dismisses this
action because SMLL’s claims are barred under the statute of limitations. Plaintiff argues
on appeal that its second action was timely because it had filed it within ninety days of
dismissal of the first action. Under C.R.S. § 13-80-111, the “remedial revival statute,” the
running of an otherwise applicable statute of limitations is tolled when an original, timely
action is dismissed for lack of jurisdiction and a new action is filed within ninety days.
The court of appeals agrees with the trial court’s determination that a dismissal for lack
of capacity or standing is not jurisdictional and, therefore, the remedial revival statute
does not apply.
A.C. Excavating v. Yacht Club II Homeowners Ass’n, Inc.
Colorado Supreme Court, June 27, 2005
2005 Colo. LEXIS 634, 2005 WL 1501510
114 P.3d 862 (Colo. 2005)
Subcontractor; duty of care; negligence; economic loss rule; residential construction
defects.
We reviewed the decision of the court of appeals last year. The Colorado Supreme Court
reiterates a point that was implicit in its holding in Town of Alma v. Azco Constr. Inc., 10
P.3d 1256 (Colo. 2000), and holds that the economic loss rule does not bar negligence
claims against contractors working on the construction of residential housing. The duty of
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care in such a case does not arise solely from contract. Rather, it arises from the
independent duty of care recognized in Cosmopolitan Homes v. Weller, 663 P.2d 1041
(Colo. 1983). The court notes, for the first time, that the duty of care owed to
homeowners applies to subcontractors as well as general contractors. As an aside, the
court notes that the general assembly has seemingly recognized this duty of care by
including subcontractors within the class of construction professionals liable to
homeowners for construction defects. C.R.S. § 13-20-802.5(4).
Tuscany, LLC v. Western States Excavating, Pipe & Boring, LLC
Colo. App. August 11, 2005
2005 Colo. LEXIS 1292 (Colo. App. August 11, 2005)
Spurious lien statute; mechanic lien; statutory construction; restitution.
In this important case concerning interpretation of the spurious lien and document statute
C.R.S. § 38-35-201, et seq., the court of appeals held that the validity of a mechanic lien
may not be determined (and the lien discharged) in a show cause hearing under the
spurious lien and document statute. Here, Tuscany hired Western States for substantial
work on a housing development. A dispute arose over approximately $1.3 million in
payments. A settlement was reached, by which Tuscany paid Western States
approximately $700,000 in return for execution of a lien waiver, with Tuscany promising
to pay an additional $600,000 “in the near future.” The lien waiver was executed and
given to Tuscany. Later, when the $600,000 was not paid, Western States recorded
mechanic liens, but did not file a foreclosure action.
Tuscany brought an action under the spurious lien and document statute. The trial court
conducted a three day trial, a mere 33 days after the case was filed. The trial court,
relying on the written release and the fact that the contractor took the risk of partial nonpayment”, concluded that the mechanic liens were groundless, and discharged the liens as
“spurious documents” under C.R.S. § 38-35-201(sub 3). Apparently, the trial court noted
that a mechanic lien could not be a “spurious lien” because the definition of a spurious
lien excludes a lien authorized by statute; the trial court instead found the mechanic lien
to be a “spurious document.” The court of appeals reverses. If a lien cannot be
challenged as a spurious lien, it likewise cannot be challenged as a “spurious document.”
The court examines the legislative intent and the legislative history behind drafting of the
statute. Specific comments were made in a hearing before a legislative committee that
mechanic liens could not be challenged under this statute. The court notes two possible
interpretations of the statute. One interpretation provides that “spurious documents”
means any document that is forged or groundless, contains a false claim, or is otherwise
patently invalid. Since a lien must be reflected by a document, any document would
include liens within this definition. On the other hand, the court noted that one can read
the statute to say that a lien may be challenged only if it is a “spurious lien” applying
principles of statutory construction, the court found that specific terms prevail over
general terms, and that an interpretation should be adopted which avoids a conflict
between two statutes. Since mechanic liens are liberally construed and the statute allows
a mechanic lien to hold property for up to six months without a foreclosure action, the
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expedited hearing provisions of the spurious lien and document statute would create a
conflict.
Next, the court of appeals rejects Tuscany’s argument that the error is harmless due to the
fact that Western States failed to file a lien foreclosure action within the period of the
statute of limitations. The court holds that the record was not sufficient to determine the
statute of limitations of issue as a matter of law, and holds that this issue does not render
the mechanic lien “moot”.
Finally, it appears that Tuscany had obtained a judgment for costs and attorney fees in the
trial court, and that Western States had not obtained a stay of execution by posting a
supersedeas bond. Tuscany, while the appeal was pending, executed on its judgment, and
sold a parcel of land owned by Western States. Since the judgment for attorney fees was
set aside, the sale likewise must be set aside. However, the court limited the damages
available to Western States to recovery of the proceeds of the sheriff’s sale, plus statutory
interest. This follows the rule in the Restatement (First) of Restitution § 74, and assumes
that the execution sale was properly conducted. The property was acquired by bona fide
purchaser.
CONTRACTS / SPECIFIC PERFORMANCE / FRAUD
Denver Foundation v. Wells Fargo Bank, N.A.
Colo. App. October 20, 2005
2005 Colo. LEXIS 1675 (Colo. App. October 20, 2005)
Contract interpretation; trust agreement; cy pres doctrine.
This case concerns the Denver Foundation, a community trust established in 1925. Since
a trust at that time could not hold title to property, it was customary for donors to give
money or property in trust, naming a bank as trustee. One such trust was formed in 1977,
naming United Bank (now Wells Fargo Bank) as trustee. In 1983, the Denver
Foundation created a nonprofit corporation with the same name. The corporation was
authorized to hold and manage assets and investments. In this action, the Denver
Foundation sought to transfer assets in the 1977 trust from Wells Fargo; Wells Fargo
resisted, desiring to maintain control of the trust assets. The court of appeals reverses the
holding of the Denver probate court requiring transfer of the trust assets, with some
discussion that may be of interest to real estate lawyers, although the assets in question
appear to have been stocks and bonds. First, if both parties to an agreement argue that
the agreement is not ambiguous, it is appropriate for the court to interpret the agreement
as a matter of law, and grant summary judgment to one party or the other. In this
particular case, the trust agreement stated that the assets would be held in trust for the
benefit of the Denver Foundation or its successors in interest. However, the trust
agreement also provided that the Denver foundation was not authorized to direct
disbursement of principal or invade the principal of the trust. The court noted that a
provision in a trust agreement granting one party authority to construe a contract
conclusively is invalid, and that discretionary authority to construe provisions of trust
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agreements is subject to review by a court for reasonableness. The court determined that
the cy pres doctrine is applicable here, as was the doctrine of equitable deviation. The
court determined that the change in corporate structure of the Denver Foundation was not
sufficient reason to render the restrictions in this particular trust agreement impossible,
impracticable, or illegal to carryout the purpose of the settlor. Finally, the court
determined that particular provisions of the trust allowing the Denver Foundation the
power to modify the trust documents when changed circumstances render the restrictions
unnecessary, undesirable, or inconsistent with the charitable needs of the community.
This provision does not apply where the particular trust agreement specifically denies the
Denver Foundation the power to invade the principal.
COVENANTS / COMMON INTEREST COMMUNITIES
Estate of McIntyre v. Lion’s Ridge #4 Homeowner’s Ass’n
Colorado Court of Appeals, May 5, 2005
2005 Colo. App. LEXIS 671, 2005 WL 1038924
Restrictive covenant; subdivision restriction.
McIntyre files a declaratory judgment action against his homeowner’s association and
other individual lot owners, seeking to effect a resubdivision of his lot. The first
Declaration of Protective Covenants, written in 1980, contained an express restriction
against subdivision of lots in the subdivision. An Amended Declaration in 1985 did not
contain the express restriction, and did not contain any express language either permitting
or prohibiting subdivision. A 1999 Amendment included once again the express
provision prohibiting subdivision. McIntyre argues that the elimination of the express
provision in the 1985 document means that the prohibition on subdivision had been
removed. The association counters that the revised definition of a “lot,” allowing only
“one building per lot,” is tantamount to a prohibition on further subdivision. The appeals
court agrees, rejecting McIntyre’s argument that this language restricts only the number
of buildings per lot, not the number of lots in the development. The court reasons that the
word “lot” as defined in the 1985 document refers to the units of property that were
originally conveyed by the developer and, therefore, an express restriction on subdivision
would be redundant. Because of its holding the court does not address McIntyre’s
argument with respect to the validity of the 1999 Amendment.
EASEMENTS / ROADS
Eichhorn v. Kelley
Colorado Court of Appeals, December 16, 2004, cert. granted May 16, 2005
111 P.3d 544 (Colo. App. 2004)
Hunting easement; punitive contempt; private counsel authority to prosecute
contempt proceedings.
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This case is about the authority of a court to impose punitive contempt sanctions under
C.R.C.P. 107 when the citation is prosecuted by counsel for one of the parties in pending
litigation. However, the facts are interesting, so we take a look. X owns a ranch that is
subject to a hunting easement appurtenant to adjoining property owned by Y. “A dispute
arose,” the court opines in understated fashion, over the nature and scope of the
easement. At one point, X gets sufficiently exercised about the hunters on his property
that he takes to operating heavy equipment in a popular hunting ground, and he sets up a
“hunting camp” of his own on an elk crossing. The trial court entered a judgment
outlining the rights of the parties, warning that “the extraordinary use of motorized
vehicles, excessive noise, and unreasonably large hunting parties” and similar acts by X
in order to frustrate successful hunts by Y would be construed as a violation of the order.
Ultimately X decides to go into the logging business and clear cuts some 300 acres. The
judge holds him in contempt. That order is appealed, and is subsequently remanded for
further findings as to whether the conduct was “offensive to the authority and dignity of
the court” and for reconsideration of the sanctions. On remand, the judge sentenced X to
two days in jail, and fines him $1,000. On appeal, the court holds that Y’s counsel was
properly allowed to prosecute the contempt case. “When noncompliance with a court
order occurs out of the direct sight or hearing of the court, it is proper for an aggrieved
party . . . to bring the matter to the attention of the court by initiating contempt
proceedings and seeking sanctions.” Most jail sentences for contempt are remedial, rather
than punitive, so the issue has not really come up since the supreme court adopted
C.R.C.P. 107 a few years back.
The supreme court has accepted review on these issues: (1) whether private counsel for
the beneficiary of a court order is authorized by statute to prosecute an alleged punitive
contempt of that order on behalf of the court and, if so, whether that creates a conflict of
interest or an appearance of impropriety; and (2) whether a beneficiary of a court order
has standing to pursue punitive sanctions for an alleged contempt of that order.
ESTATES / PARTITION /
FORECLOSURE, DEBTOR-CREDITOR, RECEIVERS, LENDER LIABILITY
Preserve at the Fort, Ltd. v. Prudential Huntoon Paige Assocs.
Colorado Court of Appeals, December 30, 2004
2004 Colo. App. LEXIS 2422, 2004 WL 3015796
Deed of trust; contract interpretation; prepayment penalties; HUD regulations.
Borrower sues lender for a refund of a portion ($104,000) of a fairly substantial
prepayment penalty of $678,000 charged by lender and paid by borrower upon the
refinance of a $16 million mortgage loan on an apartment project. The loan documents
have arguably conflicting provisions, providing in the note that “notwithstanding any
provision herein for a prepayment charge,” principal prepayments of less than 15% of
principal in any one calendar year may be made without prepayment penalty. However,
this provision of the note also said that it was “subject to the Rider attached hereto,” and
the Rider provided that “[n]otwithstanding anything else in this Note to the contrary,” this
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Note “may not be prepaid in whole or in part” prior to a date eight years down the road.
Borrower lost, and the court of appeals affirms, holding that the Rider negates or
supplants any language in the Note that might permit prepayment. Perhaps of greater
interest, the court holds that these provisions do not violate HUD regulations that seem to
prohibit imposition of a prepayment penalty on 15% of the original principal prepaid in
any one calendar year. The court finds that an exception to this rule in 24 C.F.R. §
200.87(c) applies here and, therefore, authorizes the penalty. The exception applies where
the mortgage is given to secure a loan made by a lender “that has obtained the funds for
the loan by the issuance and sale of bonds or bond anticipation notes,” in which case the
mortgage may contain a prepayment penalty. Perhaps counter-intuitively, “other bond
obligation” includes any agreement between a mortgagee and a third party investor that
provides for the pass-through of payments of principal and interest actually received by
the mortgagee at a stated interest rate and on a fixed income schedule. Here, lender's
“participation and serving agreement” with a third party lender fits the bill—and the
prepayment penalty passes muster. See Mortgagee Letter 87-9, interpreting 24 C.F.R. §
200.87(c).
First Atlantic Mortgage, LLC v. Sunstone North Homeowners Ass’n
Colorado Court of Appeals, February 24, 2005
2005 Colo. App. LEXIS 262, 2005 WL 427700
HOA assessment lien; super priority; foreclosure.
This case, brought in the context of a spurious lien action under C.R.C.P. 105.1, explores
the maximum amount that an association can claim to be senior to the lien of the first
mortgage lender—the “super priority” lien. The statute, C.R.S. § 38-33.3-316, says that
“an amount equal to” the regularly scheduled expense assessments that “would have
become due” in the six months prior to commencement of an action by the association or
a foreclosure by a senior lienor is senior in priority to prior security interests. Here, that
amount was $804. The actual assessments due at the time action was brought by the
senior lienor were $687, but with attorney’s fees and costs the tab was $1,455. Therefore,
the super priority portion of the lien would be either $804, if attorney’s fees and costs are
included, or $687. The court affirms the trial court’s ruling that attorney’s fees are a part
of the lien and, therefore, are to be included in the “super priority” calculation. C.R.S. §
38-33.3-316(1). The court reserves ruling on whether the prioritized portion of a lien may
continue to increase, i.e., to accrue interest, after commencement of legal proceedings.
Finally, the court is curiously silent as to whether the association gets its attorney fees as
the prevailing party under the spurious lien statute. C.R.S. § 38-35-204(3).
Estates in Eagle Ridge, LLLP v. Valley Bank & Trust
Colo. App. July 28, 2005
2005 Colo. LEXIS 1209 (Colo. App. July 28, 2005)
Foreclosure; Rule 120; sufficiency of mailing; sufficiency of notices; Rule 120
Venue.
Valley Banks sought to foreclose on a deed of trust against property owned by the
Hamiltons and their partnership. The loan was in excess of $1.4M. The deed of trust
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listed the Hamiltons’ address, and provided that notice of foreclosure proceedings could
be sent to that address unless the debtor gives formal notice to the bank of a change of
address for the purposes of notice. Debtors moved from the address listed in the deed of
trust, but did not give notice of change of address pursuant to the provision of the deed of
trust. The property went to sale. Apparently after learning of the sale, the debtors filed
this action to set aside the sale, arguing that the mailed notice was insufficient under
C.R.C.P. 120, and violated due process rights. The court holds that the notice was
sufficient, given the provision in the deed of trust that allowed notice to be given to that
address unless the debtor provides a written notice of change of address. Of course,
C.R.C.P. 120(a) requires a creditor to provide in its motion for an order authorizing the
sale the name and last known address “as shown by the records of the moving party”
grantor. The court reasons that the deed of trust is a record of the bank, and notice given
to that address is sufficient. Aside from the lack of formal notice given to that address is
sufficient. Aside from the lack of formal notice pursuant to the deed of trust, the decision
is silent as to whether any other records in the bank’s files reflected the accurate address.
Presumably not. The court rejects the argument that the debtors that Valley Bank
violated their due process rights by not making a reasonable effort to locate their most
current mailing address. See COLORADO REAL ESTATE MANUAL, Chapter 25, Pages 20008 (2004). (Commission form deed of trust has similar provision noted by court.) In a
separate issue, debtors argue that lender improperly sought a C.R.C.P. 120 order in
Denver District Court abandoning an initial filing for the same purpose in Larimer
County District Court, because of procedural demands of that court. The court holds that
Denver District Court had jurisdiction to enter the C.R.C.P. 120 order. The court holds
that the rule of “priority of jurisdiction” did not apply to divest the Denver District Court
jurisdiction. There was no risk of inconsistent decisions, as lender had abandoned the
Larimer County District Court proceeding after its initial request for an order was denied
on procedural grounds.
JUDGMENTS / FRAUDULENT TRANSFER
Hewitt v. Rice
Colorado Court of Appeals, December 30, 2004
2004 Colo. App. LEXIS 2418, 2004 WL 3017267
Fraudulent Transfer Act; malicious prosecution; attorney’s fees.
In 1991, Hewitt sued Pitkin County Bank on a variety of lender liability claims. The
initial case ended with a judgment on the bank’s counterclaims against the borrower for
$84,000. Some seven years later, when the judgment debtor sold property to an entity
called VPA, the bank brought a fraudulent transfer claim, recorded a notice of lis
pendens, and sought judgment for attorney’s fees incurred in postjudgment collection
efforts. The following year, Hewitt (the judgment debtor) paid the “full” amount of the
judgment. The bank then moved to dismiss the fraudulent transfer claims and “released”
its notice of lis pendens. However, borrower continued to assert counterclaims against the
bank and its counsel for slander of title, abuse of process regarding the lis pendens, and
intentional interference with contract relations. Ultimately VPA settled those
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counterclaims against the bank (but not its counsel, who had now withdrawn because
they had a conflict) and received cash. The counterclaims of Hewitt and VPA against the
bank’s attorneys were dismissed by the court based on the statute of limitations. Hewitt
and VPA then filed another lawsuit against the bank’s counsel for malicious prosecution.
The trial court dismisses and the court of appeals affirms, holding that a settlement does
not satisfy the required element that “the [earlier] proceeding was resolved in favor of the
plaintiff.” This element of a malicious prosecution claim requires that the initial case be
dismissed on the merits. Finally, the attorneys recover their attorney’s fees against Hewitt
because Hewitt’s tort claim was dismissed on a C.R.C.P. 12(b) motion. C.R.S. § 13-17201.
Counsel should note that fraudulent transfer claims are frequently inciting counterclaims
of this type, and counsel often need to step aside if they are named in the counterclaims.
Shepler v. Whalen
Colo. Supreme Court, September 12, 2005
119 P.3d 1084 (Colo. 2005)
Judgment lien; equitable interest; priority; notice of lis pendens.
We reviewed the decision of the court of appeals last year. The supreme court granted
cert. and affirms. Husband with many judgment creditors takes a chunk of money and
pays down a mortgage on property titled in his wife’s name. Several judgment creditors
had recorded transcripts of judgment in the county where the property was located. One
of the junior judgment creditors files a fraudulent transfer action seeking an equitable lien
in the wife’s property. The other judgment creditors, senior to the plaintiff, intervene.
They win on the fraudulent transfer claim, but who is first in line in terms of priority –
the earliest recorded judgment lienor, or the first to record a notice of lis pendens along
with a civil action to us seeking an equitable lien?
In a five to two decision, with Kourlis and Coats dissenting, the Colorado Supreme Court
holds that the judgment debtor had neither a legal or equitable interest in the property,
and therefore judgment liens did not attach to the wife’s property. In order to create a
lien, the judgment creditors must file a civil action seeking equitable relief. Such an
action, along with a recording of a notice of lis pendens, establishes the creditor’s
equitable lien on the fraudulently conveyed property. A junior creditor who first takes
action to expose the fraudulent transfer by filing suit takes priority over senior creditors
holding judgments recorded prior to that of plaintiff.
The court’s reasoning is interesting, as is the dissent. The husband did not acquire an
equitable interest in the property simply by paying down wife’s mortgage. The court
then notes that a fraudulent transfer is voidable rather than void – it requires prosecution
of a civil action. On this point, the court relies heavily on FREEMAN’S 1925 TREATISE ON
THE LAW OF JUDGMENTS. The court rejects the senior creditor’s argument that payment
of the mortgage by the husband gave husband a constructive trust on the property.
Rather, the effect of the fraudulent transfer of funds to pay wife’s mortgage placed a
constructive trust on the wife’s property in favor of the creditors. However, the court
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determines that the lien does not arise as a result of the recording of the transcripts of
judgment – because husband had no legal or equitable interest in the property – and,
therefore, priority is determined in favor of the first party to bring an action to uncover
the fraud and impose the constructive trust. The court cites with approval a 1924 case
which held that the recording of a notice of lis pendens creates a lien on the property at
the time that notice is filed. Shuck v. Quackenbush, 227 P. 1041, 1045 (Colo. 1924). The
court finds that this result is equitable because it rewards the creditor who “put forth the
most effort.” The court holds that the three “senior” judgment lien creditors, each of
whom intervened simultaneously, shared equal priority against the property. In dissent,
Justice Kourlis reasons that judgment liens attached to after-acquired property. If a
constructive trust is established that is an equitable interest in property to which a
judgment lien can attach. C.R.S. § 13-52-102(1).
LEASES / EVICTION
Dinnerware Plus Holdings, Inc. v. Silverthorne Factory Stores, LLC
Colorado Court of Appeals, December 16, 2004
2004 Colo. App. LEXIS 2301, 2004 WL 2903590
Commercial lease interpretation; “provided that”; promise vs. condition precedent.
This is a dispute involving the Mikasa store in the Silverthorne Factory Outlet shopping
center. The long-term lease provided that tenant pay a fixed monthly rent, together with
“pass-through charges” for percentage of taxes, maintenance, and insurance “provided all
other tenants are similarly obligated.” If it turns out that other tenants are not charged
their proportionate share of these charges, is tenant excused from this liability because
landlord cannot prove a condition precedent, or does tenant have to pay the charges and
sue landlord for damages for breach of contract? The court of appeals reverses the trial
court, and says that it is a condition of performance. Tenant withheld payment of these
charges when it learned that other tenants did not have to pay a proportionate share of
these charges. Tenant filed a declaratory judgment action that it had no liability for these
charges because payment of such charges by other tenants is a condition of its liability.
Landlord filed an eviction action, and the cases were consolidated. The trial court found
for landlord on the interpretation issue, and awarded judgment for the past due amounts.
The eviction claim was nevertheless dismissed on procedural grounds that are not
described. The court of appeals reverses in part, holding that “provided that” is language
of condition, not promise. Therefore, landlord cannot recover pass-through charges from
this tenant unless it can show that other tenants are similarly charged—a point which
landlord concedes. The court distinguishes cases holding that conditions precedent are
not favored if there is doubt as to the parties’ intention. The court holds that it will not
apply that theory of contract interpretation here, in light of the fact that it was entirely
within landlord’s control as to whether other tenants would be required to pay
proportionate pass-through charges, and it did not consider the lease provision
ambiguous. Since there is no liability, tenant is not in default, and tenant is awarded its
fees under the FED statute.
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Highlands Ranch Univ. Park, LLC v. UNO of Highlands Ranch, Inc.
Colorado Court of Appeals, January 27, 2005
2005 Colo. App. LEXIS 109, 2005 WL 170735
Breach of commercial lease; guarantor’s liability; termination of lease.
Highlands Ranch University Park (landlord) and Uno of Highlands Ranch (tenant)
entered into a lease, and Uno Restaurants (a related entity) signed as guarantor. Under the
lease, tenant agreed to construct a building and lease the site for 20 years. Upon
expiration of the lease, or upon default, landlord was to acquire title to all improvements.
Within six months of signing the lease, tenant informed landlord that it would not
perform. Landlord proceeded to build a larger building on the site and obtain leases from
two tenants. The combined rent from the two tenants was more than landlord would have
received from the lease with the original tenant. In landlord’s suit against tenant and
guarantor for breach of the lease and guaranty agreements, the trial court awarded
damages, including the costs incurred by landlord to mitigate, and two years of lost rental
incurred before rental payments began from the replacement tenants.
The court of appeals holds that summary judgment on the issue of liability was
appropriate because tenant’s repudiation and breach was unequivocal. The court of
appeals affirms the trial court’s determination that guarantor’s liability was coextensive
with that of the tenant, based on the language of the agreement, the purpose of the
guaranty, and the circumstances surrounding its execution. However, the appeals court
reverses the damage award. Both parties presented evidence that the rental value from the
replacement tenants exceeded the rental value from the original tenant. They also
presented evidence that the value of the larger replacement building had a higher terminal
value than that of the smaller building required by the lease. The trial court erred when it
limited its findings to analysis under the first two years of the lease (pursuant to a damage
limitation provision in the lease) when looking at the mitigation issue, rather than
considering evidence of the long-term rental and terminal building values. An offset
should have been granted against tenant’s unpaid rent liability for landlord’s excess
replacement rent, discounted to present value, and the same offset should have also been
granted to guarantor. Additionally, the trial court erred when it did not offset the award of
construction expenses to landlord by the difference between the terminal value of the
larger building actually constructed and the terminal value of the smaller building
required by the lease. Finally, the trial court lacked jurisdiction to grant prejudgment
interest to landlord because defendants had already filed a notice of appeal with the court
of appeals.
CMCB Enterprises, Inc. v. Ferguson
114 P.3d 90 (Colo. App. 2005)
Colorado Court of Appeals, February 24, 2005
2005 Colo. App. LEXIS 257, 2005 WL 427726
Past due rent; guarantor; successor corporation liability.
CMCB, landlord, entered into a 25-year lease for a restaurant in Littleton. In 1993, the
tenancy interest was assigned to Bocci’s, Inc., owned by Ferguson and Camozzi, who
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guaranteed the lease. They started Duggan’s Grill in the space. In late 1993, tenants
formed three corporations for each of three restaurants they owned; this one was
Duggan’s Grill, Inc. They formed a fourth corporation, Basic, Inc., to act as the
management entity for the three restaurants. Bocci’s transferred its assets to the three new
corporations. Landlord consented to assignment of the lease to Duggan’s, Inc. The
assignment contained covenants that the assignor remained liable. In 1996 Bocci’s asked
landlord for permission to assign the lease to Robson. Landlord refused, but Robson took
over the space in any event, and operated Duggan’s until 1999, when landlord evicted
Robson for nonpayment. Landlord sued for rent, and the trial court after a bench trial
found damages of $160,177. The real issue is which solvent parties could be held liable.
Bocci’s had no assets, and Duggan’s, Inc. was now a shell. The court found that Basic
was liable as a successor entity, a “mere continuation” of Bocci’s. A successor
corporation may be liable for the debts of another corporation, even if it only purchases
the assets and not the stock of the corporation, if (1) there is an express or implied
assumption of liability; (2) the transaction results in a merger or consolidation of the two
corporations; (3) the purchaser is a “mere continuation” of the seller; or (4) the transfer is
fraudulent for the purpose of escaping liability. The mere continuation exception applies
if there is a continuation of directors, management, and shareholder interest, or
inadequate consideration. The question turns not on whether there is a continuation of the
business, but rather whether the purchaser of the assets is essentially a continuation of the
selling corporation. The court of appeals affirms the trial court’s judgment on this issue.
The holding that the guarantors had not been released (on fact-specific grounds) is
likewise affirmed, as is the trial court’s finding that landlord did not fail to mitigate its
damages. The mitigation attempts ran the usual gamut and then some, including ads in
the paper, emails, brochures, posting a sign on the premises, and engaging a real estate
broker before the eviction started.
Mishkin v. Young
Colorado Supreme Court, February 28, 2005
107 P.3d 393 (Colo. 2005)
Residential lease; security deposit; duty to account; “that amount wrongfully
withheld.”
A pro se tenant, with the support of three amicus curiae, wins a reversal of a county court
judgment allowing treble damages for only part of the security deposit held by a landlord
after expiration of the statutory period for accounting under C.R.S. § 38-12-103(3)(a).
Despite a trial court finding that the amount of property damage to the rental unit
exceeded the security deposit, the landlord’s failure to provide an accounting to the tenant
and to return to the tenant that portion of the security deposit not properly withheld
triggers the triple damage remedy. The statute allows the landlord to withhold money due
for “nonpayment of rent, abandonment of the premises, or nonpayment of utility charges,
repair work, or cleaning contracted for by the tenant.” Here, the landlord (as it were, an
attorney) did provide an accounting almost immediately after receipt of the tenant’s
mandatory seven-day notice of intent to file suit—a condition precedent to recovery of
treble damages. Along with the accounting, the landlord withheld $1576.60 for damage,
and returned the tenant a check for $50.40. The county court allowed damages based on
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three times that smaller number. The court deals with conflicting provisions of the
statute—the section that says that failure to provide an accounting works a forfeiture of
“all rights to withhold any portion” of the security deposit; the sections that provide that
“nothing in this section shall preclude the landlord from retaining the security deposit for
. . . repair work;” and the section that provides that the treble damage award applies to
“that portion of the security deposit wrongfully withheld.” In short, any withholding of
any portion of the security deposit is “wrongful” if no accounting is given within the
thirty-day (or longer if allowed by the lease) period. The majority valiantly attempts to
explain the reason for the seven-day notice, if not to allow the landlord to cure the
“default.” The dissent by Justice Kourlis is quite compelling in terms of dealing with the
court’s own precedents and the language of the statute. Compare Turner v. Lyon, 539 P.
2d 1241, 1243 (1975) (purpose of the seven-day notice provision in subsection (3)(a) is to
give landlords “one last week to return the security deposit”).
Woznicki v. Musick
119 P.3d 567 (Colo. App. 2005)
Colorado Court of Appeals, April 7, 2005
2005 Colo. App. LEXIS 514, 2005 WL 774434
Unlawful detainer; equitable mortgage; sufficiency of evidence.
Musick sold a house in Aspen to Woznicki for an undisclosed amount, on terms recited in
a “deal summary.” Apparently Woznicki borrowed a portion of the purchase price from a
third party lender. Musick leased back the property for an 18-month period, with prepaid
rent of $25,000 per month. Musick also retained an option to repurchase the property
during the term of the lease. After 18 months passed, Musick stayed put, and Woznicki
started an eviction action, which led to a multiplicity of claims and counterclaims. The
trial court apparently severed the eviction claim from the other claims, and a jury trial
was held on the issue of possession and damages. Musick defended on the basis that the
sale was an equitable mortgage, though it is unclear whether any portion of the purchase
price was deferred. Of course, an equitable mortgage must be foreclosed judicially, and
the equitable owner has the benefit of statutory redemption rights. In any event, the court
reviews the law on the elements of an equitable mortgage, and notes that the relevant
factors in determining whether a transaction is a sale or a mortgage include the existence
of a debt, the relationship between the parties, the availability of legal advice, the
sophistication and circumstance of the parties, the adequacy of consideration and the
possession of the property. No one factor is determinative. RESTATEMENT (THIRD) OF
PROPERTY: MORTGAGES § 3.2. The court upholds the trial court’s ruling that the landlord
presented sufficient evidence to persuade a jury that the transaction was a sale and a
lease, rather than an equitable mortgage. The court also affirms the damage award for
holdover rent calculated at $7500 per month, holding that the contract rent of $25,000 per
month was “some evidence” of the fair market rent.
Duhon v. Nelson
Court of Appeals, August 11, 2005
2005 Colo. App. LEXIS 1300 (Colo. App. August 11, 2005)
Mobile home eviction; expiration of lease; grounds for eviction.
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In this case, the owner of a mobile home park wanted to sell the park. After the lease of
one particular tenant expired, that tenant in addition, had listed her mobile home and her
lot for sale, even though she did not own the space within the mobile home park. Owner
served tenant with a notice to quit. A month later, owner filed a forcible entry and
detainer action in county court. Tenant answered and brought counterclaims for
intentional interference with contract, that being the owners interference with her contract
with her broker to sell her mobile home. The case goes to trial before a jury, and jury
holds in favor of the tenant on the eviction, and awards her damages on her counterclaim.
The court of appeals affirms, holding that under the Mobile Home Eviction Statute
C.R.S. § 38-12-203, expiration of a lease is not a grounds for eviction. The statute lists
the following bases for eviction: violation of park rules, change of use of the mobile
home park, and nonpayment of rent. The court of appeals also holds that the verdict for
tenant on the interference of the contract claim is supported by the record. The potential
buyer of the tenant’s mobile home testified that the park manager attempted to dissuade
him from purchase by saying “you don’t wanna buy this trailer cause if you buy it, you’re
gonna have to move it.” The manager also told tenant’s broker to get off the property,
and stuck a can of mace in his face.
It should be interesting to see if the legislature amends this statute, in light of the
decision. The court of appeals denies the landlord’s argument that the statute, as
interpreted, essentially creates a life in the tenant, because there are some available
grounds for eviction. If you have clients with mobile home parks, it would probably pay
to take a careful look at your leases.
MALPRACTICE / PROFESSIONAL LIABILITY & CONDUCT
Anstine v. Alexander
Colorado Court of Appeals, April 21, 2005
2005 Colo. App. LEXIS 587, 2005 WL 913503
Legal malpractice; aiding and abetting client’s breach of fiduciary duty; pro rata
fault.
Builders Home Warranty (BHW) files for bankruptcy when it realizes that the insurance
policy it had bought to cover warranties sold by BHW to homeowners was fraudulent and
worthless. BHW’s attorneys suggested to its president that it could either try to find
replacement coverage or file for bankruptcy. After encountering difficulty in finding
replacement coverage, BHW’s attorneys again suggested bankruptcy. When BHW’s
president refused, the attorneys nevertheless helped the company to “warehouse” the
warranty premiums it had received and to use the premiums to purchase (unacceptable to
regulators) off-shore policies. BHW eventually filed for bankruptcy, and the trustee sues
BHW’s president for breach of fiduciary duty to the company, and sues the attorneys for
legal malpractice and for aiding and abetting a breach of fiduciary duty. The jury finds
for the attorneys on the malpractice claim, but finds them one percent at fault for the
breach of fiduciary duty, while apportioning the remaining fault to BHW’s president. The
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trial court then amended the verdict by applying a “conspiracy” exception to the pro rata
liability statute and holding the attorneys and the president jointly liable. C.R.S. § 13-21111.5(4).
The court of appeals holds that the trustee in bankruptcy, as a hypothetical judgment lien
creditor, has standing to sue the BHW’s president and attorneys on the fiduciary duty
claim. When a company becomes insolvent, its officers and directors become fiduciaries
for the company’s creditors. There is no requirement that an aider and abettor owe a
fiduciary duty to the third party injured by the principal’s breach; this allows the trustee
to target the company’s attorneys. Since the jury had been properly instructed as to the
aiding and abetting tort, its decision stands. The court notes that the trustee, in its role as a
hypothetical judgment lien creditor, is not subject to the “in pari delicto” defense.
However, the trial court erred when it amended the jury’s verdict to hold the attorneys
and the president jointly liable under the “conspiracy” exception to the pro rata liability
statute, C.R.S. § 13-21-111.5(4). The elements necessary to impose joint liability under
this section are different and more complex than those required to find aiding and
abetting liability. The jury was not given instructions as to joint liability, and did not
make the detailed findings required under those instructions. Therefore the trial court’s
verdict modification was actually a substantive change in the jury’s determination,
because the jury may or may not have found the attorneys jointly liable if it had been
properly instructed. A determination of aiding and abetting alone does not, as a matter of
law, give rise to joint liability. Additionally, while Colorado allows an award of attorney
fees in fiduciary duty cases involving trusts, that exception to the “American rule”
requiring each party to pay their own fees does not apply here.
PREMISES LIABILITY / TRESPASS / NUISANCE
Anderson v. Hyland Hills Park & Recreation Dist.
Colorado Court of Appeals, December 30, 2004
2004 Colo. App. LEXIS 2430, 2004 WL 3015808
Premises liability; standard of care; invitee; amusement parks.
Anderson is hurt at a public water park ride when he grasps the side of a sled on which he
is riding, rather than the handle of the slide – ouch. At trial Anderson successfully argues
that a water park operator has the “highest degree of care a reasonably careful person
could exercise,” consistent with CJI – CIV. 4th 12:13 (1998), a jury instruction based on a
1964 case dealing with amusement parks. However, consistent with the holding in Vigil
v. Franklin, 103 P.3d 322 (Colo. 2004) the water park operator is a landowner and
entitled to the protections of the premises liability statute. A rider on a water park ride is
an invitee, and can recover only for damages caused by the landowner’s unreasonable
failure to exercise reasonable care to protect against the dangers of which it knew or
should have known. C.R.S. § 13-21-115(3)(c). The judgment is reversed and remanded
so that the water park’s liability can be tested against this lesser standard.
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Practice point - both sides of the personal injury bar can use the holding in Vigil that all
common law standards — for claims as well as defenses — are superceded by the
premises liability statute.
Wilson v. Marchiondo
Colorado Court of Appeals, April 7, 2005
2005 Colo. App. LEXIS 509, 2005 WL 774404
Premises liability statute; dog bite; landlord liability.
Tenants tell landlord prior to signing lease that they own a Rottweiler. Landlord agrees to
permit the dog to be kept on the premises, but requires tenants to post “Beware of Dog”
signs. The dog bites a child playing with tenants’ children, and the victim and his parents
sue landlord. Landlord wins on summary judgment. Under the premises liability statute,
C.R.S. § 13-21-115, the court first considers whether the landlord owed victim a duty of
care after leasing the residence. Generally, tenants are entitled to the exclusive possession
of leased premises, classifying them as “persons in possession” under the premises
liability statute. The general rule applies in this case, even though landlord did reserve a
right of inspection and maintenance. This reservation is not seen as a sufficient attribute
of control to support imposition of tort liability. Additionally, landlord’s verbal grant of
permission for the dog to be kept on the premises does not result in an agreement by him
to keep possession or control of the dog.
The second issue on review is whether landlord was a “person in possession” of the
property before signing the lease, which would result in a duty of care owed to the victim
as a licensee wherein liability could be imposed for an “unreasonable failure to warn of
dangers not created by the landowner which are not ordinarily present on property of the
type involved and of which the landowner actually knew.” The court of appeals holds
that landlord could only be liable for the dog attack if he actually knew, prior to signing
the lease with tenants, that the dog was dangerous. The court of appeals upholds the trial
court’s determination based on evidence in the record that there was no genuine issue of
material fact that landlord had actual knowledge of the dog’s violent nature before
signing the lease with tenants.
Harsh v. Cure Feeders, L.L.C.
116 P.3d 1286 (Colo. App. 2005)
Colorado Court of Appeals, June 2, 2005
2005 Colo. App. LEXIS 842, 2005 WL 1303261
Crop loss; trespassing animals; measure of damages; Colorado fence law.
In a neighborly dispute between plaintiff farmer and defendant feedlot operator over
trespassing cattle, the court of appeals reverses the trial court’s decision to award a mere
$150 to plaintiff (rent for one day of grazing). Defendant’s cattle went on quite a romp, to
the point of damaging a tank and causing a substantial spill of fertilizer, which in turn
destroyed plaintiff’s crops on a large swath of land. Colorado’s fence law, C.R.S. § 3536-102(1), protects landowners from trespassing animals that have been able to make
their way through a “lawful fence” by permitting recovery of damages for trespass and
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injury to “grass, garden or vegetable products, or other crops.” The court of appeals holds
that the proper measure of damages for partial crop destruction is the one used in
Bloxsom v. San Luis Valley Crop Care, Inc., 596 P.2d 1189 (Colo. 1979) (difference
between income from damaged crop and “the average yield of the same crop on similar
land in the agricultural neighborhood in the same season and locality”). The evidence
plaintiff presented was sufficient to prove damages and the court remands for an award of
the difference between yields plus prejudgment and postjudgment interest, a sum
exceeding $15,000.
As for the damage from the fertilizer spill, the court of appeals holds that the trial court
erred in relying on Colorado fence law to exclude plaintiff’s non-crop damages from the
damaged fertilizer tank (the lost fertilizer, clean up costs, etc.). By describing damages
that can be recovered to crops, the statute should not be read to limit recovery under the
common law to other types of consequential damages. At best, the fence law serves as a
defense to owners of trespassing animals who can prove that the claimant’s fence was
insufficient to guard against intruders. Since there was no dispute that plaintiff’s fence in
this case was a lawful fence, the fence law does not serve as a limitation on damages
awarded to plaintiff.
PROPERTY TAXATION AND ASSESSMENTS
Bd. of Assessment Appeals v. Sampson
Colorado Supreme Court, January 10, 2005
105 P.3d 198 (Colo. App. 2005)
Tax appeals; burden of proof; mobile homes.
Landowner/taxpayer initially got a notice of valuation for his mobile home and ten-acre
parcel in the amount of $93,000. After some sales in Teller County came in at higher
numbers, the Board of Equalization ordered the assessor to do new valuations for mobile
homes. It did, and landowner got a new notice for $137,000. He appealed to the BOE,
which affirmed, and to the Board of Assessment Appeals, which reversed. The Board
agreed with landowner that the comparable sales that formed the basis for the new
valuation were materially different, in that the comparable properties had permanent
foundations and public road access; landowner’s mobile home had only a nonpermanent
cinder block foundation, and was on a privately maintained road. The Board ordered the
assessor to revalue the property consistent with the initial valuation. The county appeals,
arguing that there is no evidence in the record to support this valuation because
landowner (appearing pro se) presented no evidence at his hearing. The court holds that a
taxpayer protesting an assessment in a BAA proceeding only has the burden to prove by a
preponderance of the evidence that the assessment is incorrect, and need not prove an
alternate valuation. In an exhausting 29 paragraphs reviewing the law on burden of proof,
the court finds that the proper remedy is ordinarily to remand for a new assessment. Here,
however, it is appropriate to reinstate the prior valuation, where the record does not
reflect whether the BOE agreed on the initial valuation. Landowner wins.
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Hepp v. Boulder County Assessor
113 P.3d 1268 (Colo. App. 2005)
Colorado Court of Appeals, May 5, 2005
2005 Colo. App. LEXIS 677, 2005 WL 1038884
Classification of real property; statutory criteria for agricultural classification.
This property tax case concerns two adjacent parcels of land. Prior to 1995, the parcels
were used for agricultural purposes. From 1995 to 1999, the parcels were used for mining
operations. Reclamation activities were being conducted on the land as of the 2001
assessment date. The county classified the land as vacant land, and the taxpayer
challenged the assessment and sought classification and valuation for the land as
agricultural land. The trial court originally found that because the land was still
undergoing reclamation activities, it should be classified as a mine. However, after a
hearing on the parties’ post-trial motions, the court found that the mining operation was
“merely an interruption” in the agricultural use of the land and, therefore, it should
properly be classified as agricultural land.
The court of appeals reverses the trial court’s classification as error and remands for
further review and reclassification, although it makes clear what it believes the trial court
should find. The taxpayer had the burden of proving any qualifying uses to support his
agricultural classification argument. Under C.R.S. § 39-1-102(1.6)(a)(I), agricultural land
must have been used as such presently and for the two years prior. Any agricultural
classification must be based on statutory criteria, not on any non-statutory equitable
considerations. Regardless of the taxpayer’s subjective intent to use the land
agriculturally once the reclamation activities have ceased, the land’s use for the previous
two years must meet the statutory definition. The taxpayer admitted that no agricultural
activities took place in the previous two years, and the court of appeals also rejects his
argument that the subject parcels met the criteria for qualifying conservation practices.
The only two types of qualifying conservation plans are those listed in the statute;
taxpayer’s claims of an analogous conservation plan are not sufficient. The court of
appeals also remands for trial court revaluation.
Family Tree Foundation v. Prop. Tax Administrator
Colorado Court of Appeals, June 30, 2005
2005 Colo. App. LEXIS 1012, 2005 WL 1530108
Tax exempt status for real property.
Family Tree is a nonprofit organization that provides transitional housing for homeless
people and victims of domestic violence. It appealed the Property Tax Administrator’s
determination that the single family homes it owned were vacant as of January 1,
rendering them taxable for the entire year. The Board of Assessment Appeals found that
although the properties were vacant on January 1, it was undisputed that they were
subsequently occupied during the year by qualified residents and were never used for
profit or gain, and that using the January 1 date for determining tax exempt status unduly
penalized Family Tree. The court of appeals affirms. It also rejects the Administrator’s
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arguments that the language under both C.R.S. § 39-3-112(4) and C.R.S. § 39-1-105
require a January 1 determination date. Family Tree’s units are “by their very nature”
intended to have periodic vacancies, and the Administrator’s insistence on basing tax
exempt status on one day’s occupancy status “ignores the reality of Family Tree’s stated
charitable purpose.”
TITLES / TITLE INSURANCE / QUIET TITLE ACTIONS
Strekal v. Espe
Colorado Court of Appeals, December 16, 2004
114 P.3d 67 (Colo. App. 2004)
2004 Colo. App. LEXIS 2298, 2004 WL 2903583
Civil theft statute; action to recover stolen property; good faith purchaser;
recording act.
Although largely dicta, since the issue before the court was really based on claims
preclusion, the court holds (to assist the lower court on remand) that a claimant
under the civil theft statute, C.R.S. § 18-4-405, cannot recover “stolen” real
property against a good faith purchaser who is protected under our race-notice
recording statute, C.R.S. § 38-35-109. Although we are denied some of the fun
facts because they were covered in an earlier, unreported decision of the court of
appeals, it appears that Crow sold property to Strekel, who then conveyed title
back to Crow for the purpose of “clearing a title defect,” with the understanding
that Crow would fix the title defect and reconvey. Crow broke that promise,
“forcibly evict[ed]” Strekel (presumably without civil action) and sold to Masters,
who borrowed money from Lender, recording a deed of trust. At that point Strekel
sued everyone and recorded a notice of lis pendens. He lost that suit. In the
meantime, Lender foreclosed on the property and sold to Espe. Strekel sues Espe
to recover the “stolen” property, relying on C.R.S. § 18-4-405.
It appears that Espe, while aware of the prior claims because of the notice of lis pendens
in the title chain, purchased from Lender who was a good faith purchaser. Espe is held to
be protected under a good faith purchaser “shelter rule.” The court holds that even if the
stolen property statute were to apply to claims of theft by deception (it reserves judgment
on that), as opposed to claims of theft by forgery or force, the stolen property statute was
not intended to override the recording act in this situation. The court is careful to
recognize and distinguish Upson v. Goodland State Bank, 823 P.2d 704 (Colo. 1992),
which holds that a forged deed is void and does not pass title, even upon subsequent
conveyance to a bona fide purchaser.
Argus Real Estate, Inc. v. E-470 Pub. Highway Auth.
Colorado Supreme Court, March 28, 2005
109 P.3d 604 (Colo. 2005)
Uniform Statutory Rule Against Perpetuities; reformation; res judicata.
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In 1990, just months before Colorado’s adoption of the Uniform Statutory Rule Against
Perpetuities, Argus’ predecessor entered into a contract with the Authority. It sold two
parcels of land, presumably under threat of condemnation, and donated a third parcel.
Under the terms of the contract, if the Authority no longer needed the gift parcel, the
Authority would offer the parcel back to Argus or its assigns by quitclaim deed for no
charge. As we discussed last year in reviewing the lower court’s opinion, Argus sued the
Authority after eleven years passed, the highway was built on land a mile to the east of
the gift parcel, and the Authority refused to return the land. The trial court agreed with
the Authority that the condition of the gift violated the common law rule against
perpetuities, and dismissed the claim. This was affirmed on appeal. Argus then brought a
claim for reformation of the gift contract under the mandatory reformation provision of
C.R.S. § 15-11-1106(2).
The action was dismissed on res judicata grounds, and that holding is affirmed by the
Colorado Supreme Court. The thrust of the decision is that the above statutory language
does not create a statutory exception to the common law rule of claim preclusion, which
bars a party from splitting its claims and proceeding with “identical” claims in
succeeding actions. For the purpose of the claims preclusion law, a claim that “could
have been brought” in the first action is identical to the claims in the first action.
Counsel should take note of the following: (1) Learn to spot a donative transfer (as
opposed to a commercial, arm’s-length sale or lease of property) that is still subject to the
statutory Rule against perpetuities; (2) consider in drafting documents dealing with
potential future transfers of title (options, first refusal rights, lease renewals, and
conditions subsequent) language recognizing the USRAP and noting the parties’ intent as
to whether an interest is donative or not; and (2) if the Rule is raised against your client at
any point in litigation regarding the effectiveness of a donative transfer, demand
reformation immediately.
Hicks v. Londre
Colorado Supreme Court, December 19, 2005
2005 Colorado Supreme Court, 2005 WL 3455840
Equitable Subrogation.
The Colorado Supreme Court applies the doctrine of equitable subrogation to allow new
purchasers of real property and their lender to obtain priority over a judgment lien
previously recorded against the prior owner of the property. The judgment creditor,
Hicks, had obtained a judgment against Grubbs in the amount of $413,000.00. Hicks
properly recorded a transcript of the judgment which attached to Grubb’s house in
Arapahoe County. In the transaction in which Grubbs sold the house to the Londres, the
title insurance company failed to discover Hick’s lien. The new lender, Chase, provided
a $1 million loan, and the Londres invested 510,000.00 of their own dollars. Later, Hicks
filed a foreclosure action, claiming to be prior in position to either Chase or the Londres.
The trial court agreed with Hicks, the Court of Appeals reversed, holding that the
Londres and Chase had a superior position to Hicks, despite the fact that Hicks recorded
first, and the Supreme Court affirms.
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The Supreme Court lists five factors for equitable subrogation: “(1) the subrogee
made the payment to protect his or her own interest, (2) the subrogee did not act as a
volunteer, (3) the subrogee was not primarily liable for the debt paid, (4) the subrogee
paid off the entire encumbrance, and (5) subrogation would not work any injustice to the
rights of the junior lienholder.” (Slip Opinion at 4.) The primary discussion focuses on
factor 5, the equities. The Supreme Court finds that Chase and Londres were not
negligent because they relied on the title insurance commitment, which did not reveal the
lien. Focusing on Hicks, the Supreme Court finds no prejudice to him. There is no
evidence that the Chase loan had more detrimental terms to Hicks than the prior loan that
had been paid off as part of the sale of the property. Further, the court says, had Hicks
appeared at the closing, the property would not have sold because the sale price was less
than the combined liens, yet the lenders released them so that Hicks had no equity under
his prior position. With equitable subrogation, the property was transferred, and Hicks
moved from fourth priority (because of a total of three prior deeds of trust) to third
priority, behind only Chase and the Londres.
ZONING / LAND USE CONTROL
Boone v. Bd. of County Comm’rs of Elbert County
Colorado Court of Appeals, December 16, 2004
107 P.3d 1114 (Colo. App. 2004)
Zoning; 35-acre subdivision regulations.
Elbert County’s zoning regulations for development of land parcels between 35 acres and
59.99 acres in size do not on their face violate the state exemption of 35-acre parcels
from subdivision regulation. C.R.S. § 30-28-101(10)(b). Reversing the trial court, which
agreed with the landowner, the court generally notes the differences between zoning and
subdivision regulation. In Elbert County, if one divides a larger parcel into a series of 35to 59-acre parcels, zoning changes from A to A-1. What is allowed as a matter of right
under A is allowable only by special review under A-1, which involves obtaining
approval of a land use application prior to getting a building permit. Elbert County
Zoning Reg. pt. II, sec.3(c). However, the court does remand for development of a record
as to whether the zoning regulations effectively impose the functional equivalent of
subdivision regulations. The court suggests that the landowner should actually apply for a
use, and challenge the regulations “as applied” since the record was insufficient to
determine whether rezoning was a “ruse for subdivision regulation.”
Olson v. Hillside Community Church, S.B.C.
Colorado Court of Appeals, June 2, 2005
2005 Colo. App. LEXIS 838, 2005 WL 1303263
Municipal zoning ordinances; private right of action; exclusive jurisdiction;
prescriptive easement.
In this second round of appeals in a case involving construction of a church addition
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without obtaining building department approval, the court of appeals upholds the trial
court’s finding that the district court lacks subject matter jurisdiction over the equitable
claims, and its finding that plaintiffs did not meet their burden of proof regarding their
claimed prescriptive easement over part of the church’s property.
The action originally arose when the church began construction of an addition to its
existing building. The neighbors first complained that the construction was not in
compliance with portions of the Golden Municipal Code (GMC) and the Uniform
Building Code (UBC). Golden granted variances and permits after the addition was
substantially completed. The plaintiffs filed suit in Jefferson County District Court under
various claims, including a claim under the GMC and a claim asserting a prescriptive
easement. In the first round of appeals, the court of appeals remanded to the trial court
with directions to have the church remove the offending improvements. In the meantime,
the Colorado Supreme Court issued its decision in Town of Frisco v. Baum, 90 P.3d 845
(Colo. 2004), and held that when a municipality exercises its jurisdiction as a home rule
city to address local and municipal matters in its municipal court, that exercise deprives
the district court original jurisdiction. Under this rule, the court of appeals dismisses
plaintiffs’ claims in the district court for lack of subject matter jurisdiction.
Finally, the court of appeals holds that the trial court erred in finding no prescriptive
easement when it found that plaintiffs did not prove exclusive use, because exclusive use
is not necessary to establish an easement by prescription. However, the error is harmless
because there was sufficient evidence in the record to support the court’s finding that
plaintiffs’ use was not open and notorious.
Droste v. Bd. of County Comm’rs of the County of Pitkin,
Colorado Court of Appeals, October 6, 2005
2005 Colo. App. LEXIS 1620 (Colo. App. October 6, 2005)
Development moratorium; statutory interpretation; implied power.
The Droste family owns a large parcel of land in Pitkin County. Under a 1974 zoning
ordinance, the owners have the right to build a residence on at least ten acres as a use by
right. This case concerns the county’s imposition of a temporary moratorium on
development in parts of the county, including the Droste land, under the Areas and
Activiites of State Interest Act (“AASIA”), C.R.S. § 24-65.1-101 et seq. and the Local
Government Land Use control Enabling Act, § 29-20-101 (“Enabling Act”) et seq. In
2003, after denying several development applications by the Droste family, the county
passed an emergency ordinance creating a temporary moratorium on accepting,
processing and approving development applications concerning certain lands in the
county. The stated purpose was to allow time to study what zoning and development
regulations would be required to comply with the state’s requirement that a master plan
be created for the county by January 2004. The ordinance recited that 60 days should be
sufficient time for the study, it provided that the moratorium remain in effect “until
formally terminated” by the county. Ninety days later, the county extended the
moratorium for an additional six months, at a minimum.
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The Drostes filed an action seeking a declaratory judgment that the temporary
moratorium was void under the AASIA and the Enabling Act. The action did not claim
that there was an unconstitutional taking, but rather sought a ruling that a moratorium of
this type was unauthorized, especially in light of specific provisions in the statutes
allowing temporary bans on construction for a temporary period not to exceed six
months. C.R.S. § 30-28-121 ( board of commissioners pending adoption of a zoning plan
may promulgate resolution without public hearing regulations of a temporary nature not
exceeding six months prohibiting construction). The court of appeals affirms the trial
court and holds that a moratorium exceeding six months may be authorized under the
more general, implied powers in the above statutes as well as an exercise of general
zoning power. It rejected the argument that such power could be implied, given the
specific and limited grant of power to impose moratoriums under the county planning
statute referenced above. The Enabling Act is designed to give the local governments
additional or supplemental powers for the purposes set out in the act, which include
controlling population density. The fact that the ordinance did not include a specific
termination date did not render the ordinance void, in light of the stated intent that it be
for a limited period of time. The court also noted in passing that the ordinance was
actually dissolved after ten months, long before argument of the case on appeal.
Allely v. City of Evans
Court of Appeals, October 6, 2005
2005 Colo. App. LEXIS 1600 (Colo. App. October 6, 2005)
Petition to disconnect from city; application to home rule city.
C.R.S. § 31-12-601 provides that the owners of a tract or contiguous tracts of land that lie
on or next to the border of “any city” may petition the district court to have the land
disconnected form the city under certain conditions. Under the definitions applicable to
this statute, a “city” is “ . . . a municipal corporation having a population of more than
two thousand incorporated pursuant to the provisions of part 1 or reorganized pursuant to
the provisions of part 3 of article 2 of this title or pursuant to the provisions of any other
general law on or after July 3, 1877, and a municipal corporation, regardless of
population, organized as a city on December 31, 1980, and choosing not to reorganize as
a town pursuant to part 2 of article 1 of this title, but does not include any city
incorporated prior to July 3, 1877, which has chosen not to reorganize nor any city or city
and county which has chosen to adopt a home rule charter pursuant to the provisions of
article XX of the state constitution.” Article XX, § 6 of the state constitution provides
that the statutes of the state apply to home rule cities, except insofar as superceded by an
ordinance passed pursuant to the city charter. Therefore, the court must determine
whether the state statute regarding disconnection applies, or whether it is superceded by
the applicable Evans ordinance. The latter allows disconnection but under a different set
of conditions with which the plaintiffs did not comply. The court of appeals holds that
Evans, as a home rule city, could pass its own ordinance and that its ordinance supercede
the state statute. The state legislature could have used the term ‘municipality,” which
includes home rule cities. See C.R.S. § 31-1-101(6). But it did not. Further, the
legislative preamble and the testimony before the legislature upon the recodification of
Title 31 made clear that wherever the word “city” is used without a modifier, only
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statutory cities are affected.
LEGISLATIVE DEVELOPMENTS
HB 05-1032, Land Set Aside for Governmental Purposes
This bill amends C.R.S. § 24-67-106 (3) (b) to provide that any land located
within a planned unit development that has been set aside for a governmental use or
purpose and for which title is held by a governmental entity, authorizes that governmental
entity to subdivide, remove PUD restrictions, sell or otherwise dispose of all or any
portion of the land. This action will only be taken upon a finding by the county or
municipality, following a public hearing, that all or any portion of the land is not
reasonable expected to be necessary for a governmental use or purpose or that the
governmental use or purpose will be furthered by disposal of the land. The Bill requires
that the future use of the land shall in all other respects be consistent with the efficient
development and preservation of the entire PUD and with the plan.
SB 05-12, Compensation for Board Members of Special Districts, C.R.S. § 32-1-902
This bill increases the compensation to members of a special district board of
directors to an amount not to exceed $75.00 per meeting and $1,000.00 per year.
SB 05-80, Military Installations of Land Use Changes, C.R.S. § 29-1-201, et. seq.
This bill requires each local government within which is located all or any portion
of a military base to provide to the military information relating to proposed changes to
the local government’s comprehensive plan or land regulations, if the changes to the plan
or regulations would significantly affect the intensity, density, or use of any area within
two miles of the military base. The military is to be provided with an opportunity to
comment on the changes.
SB 05-224, Urban Renewal, C.R.S. § 31-25-107 (3.5) and 9 (a) (II)
This statutory amendment expands existing statutory provisions governing the
approval of an urban renewal plan or substantial modification to such plan. It requires
the Urban Renewal Authority to submit certain information to the county in which it is
located, in addition to information provided to the governing body of the municipality in
which their authority has been established. The information is to be provided to the
county 30 days prior to any hearing on the urban renewal plan. The information includes
an impact report when property taxes collected as a result of the county levy will be
utilized. Inadvertent failure of a governing or an authority to submit a plan, modification,
or report to a county does not create a cause of action or invalidate any plan or
modification. The bill authorizes the governing body of the urban renewal authority to
enter into an agreement with a county that may provide for allocation of responsibility
among the parties for payment of the costs of any additional infrastructure or services
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necessary to offset the urban renewal impact.
HB 05-1040, Applying for Real Estate Broker’s License, C.R.S. § 12-61-103 (1) (b) (I)
This act requires individuals applying for a real estate broker license to submit a
set of fingerprints directly to the Colorado Bureau of Investigation and specifies that the
Bureau shall forward the results of a background check to the Real Estate Commission.
HB 05-1264, Repeal of Real Estate Recovery Fund, C.R.S. § 12-61-301, et. seq.
The Real Estate Recovery Fund, which has had no funds in recent years, is
repealed. The bill provides for final civil actions seeking reimbursement from the fund to
be filed within 30 days after June 26, 2005, and provides for payment of pending claims.
Upon repeal of the statute, the Real Estate Commission may assess penalties when a
licensee is guilty of fraud, misrepresentation, deceit, or conversion of trust funds that
results in the entry of a civil judgment for damages.
HB 05-1159, Sale of Tax Liens by a County Treasurer, C.R.S. § 39-11-100, et. seq.
This bill allows public auction by internet or other electronic medium of property
tax liens. It requires that the published notice state that the auction is to be conducted by
means of the internet or other electronic medium, and include instructions for
participation. It allows for payment to the county treasurer at a tax lien sale by cash,
negotiable paper, or electronic funds transfer.
SB 05-56, Property Tax Appeal
To assist the assessor, this bill amends C.R.S. § 39-8-109 to require that the
appellant, following a successful property tax appeal, provide a copy of the sustained
appeal to the county assessor, and the assessor shall provide the treasurer with copies of
the sustained appeal prior to the appellant receiving a refund of taxes, delinquent interest,
costs, and witness fees.
SB 05-105, Alternative Protestant Appeal Procedures, C.R.S. § 39-5-122
This bill allows any county, not just the counties of Boulder, El Paso, Jefferson,
and Denver to use an alternate protest and appeal procedure prior to May 1 of each year,
if requested by the county assessor. The County Board of Equalization shall hear
petitions from any person whose objections or protests have been refused or denied by
the assessor.
HB 05-1058, Rights of Mobile Homeowners, C.R.S. § 38-12-201, et. seq.
This bill amends § 206 to clarify that homeowners have a right to meet and to
form a homeowner’s association. Section 213 is amended to specify that terms of the
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tenancy and the amount of rent must be set out in a rental agreement, that the standard
rental agreement shall be for a month-to-month tenancy, and that upon written request by
the homeowner to the landlord, the landlord shall allow a rental agreement for fixed
tenancy of not less than one year if the homeowner is current in all rent payments and not
in violation of the rental agreement, except that an initial rental agreement for a fixed
tenancy may be for less than one year in order to insure conformity with a standard
anniversary date. A landlord shall not evict or otherwise penalize a homeowner for
requesting a rental agreement for a fixed period. The bill amends § 217 to provide that if
a mobile home park owner intends to change the use of the land comprising the mobile
home park, it shall give written notice mailed to each mobile home owner at the address
on the rental agreement at least 180 days before the change in use will occur. It broadens
the notice requirement applicable when a mobile home park owner intends to sell the
park and adds a section encouraging local governments to allow and protect mobile home
parks in their jurisdictions, and to enact plans, including incentives to increase the
number of mobile home parks in their jurisdictions. One or members of a homeowner’s
association may form a cooperative for the purpose of offering to purchase a mobile
home park. Finally, the act provides a civil right of action against landlords that violate
any provision of the article, including actual economic damages and attorney’s fees and
costs.
HB 05-1169, Housing Issues for Victims of Domestic Violence, C.R.S. § 13-40-104
This bill prevents a landlord from seeking possession under the forcible entry and
detainer act due to an alleged substantial violation, if the violation was documented that
the tenant was the victim of domestic violence or abuse. A tenant that is the victim of
reported domestic violence or abuse within the prior 60 days may vacate the premises due
to fear of imminent danger for herself or for her children, and the tenant may terminate
the lease and vacate the premises without further liability other than payment of one
month’s rent within 90 days after the lease termination. The bill allows a landlord to hold
a security deposit until such termination amount is paid.
SB 05-100, Concerning Increased Protection for Homeowners
This bill amends sections of the Colorado Common Interest Ownership Act
(“CCIOA”), C.R.S. § 38-33.3-101, et. seq., with several new requirements, including
that: sellers of homes in common interest communities must disclose to buyers certain
association documents and buyer responsibilities and obligations as members of the
association; associations must make certain annual disclosures to homeowners on a Web
site or by e-mail, mail, or personal delivery; all Board member elections must be by
secret ballot; ballots at a member meeting must be counted by a neutral third party or a
unit owner who is not a candidate, is present at the meeting, and is selected randomly at
the meeting from a pool of at least two such non-candidate owners; associations must
provide physical notice of any unit owner meeting but may give electronic notice if
requested by owner in addition to posting notice on the Web site; associations may not
covenant to either restrict or limit xeriscaping or require the primary or exclusive use of
turf grass and may not place more procedural requirements on unit owners seeking
29
approval for xeriscaping than those rules that already exist; associations may not prohibit
unit owners from displaying the American flag on their property or completely prohibit
the display of political signs; associations may not prohibit the parking of a motor vehicle
on a street, driveway or guest parking area if the owner of the vehicle is required by his
or her employer to keep the vehicle at his residence during designated times; associations
may not require use of nonflammable materials that would exceed the cost of replacing
flammable materials; associations must have their books and records audited or reviewed
using generally accepted auditing standards once every two years; and Board members
must disclose that they have a conflict of interest in any action or contract that would
benefit any board member or a board member’s relative.
HB 05-1168, Administrative Matters Related to a Foreclosure Proceeding, C.R.S. § 3838-101 et. seq.
This bill provides for certain minor changes to the foreclosure statutes. Records
relating to a foreclosure sale may be sent or received in electronic form between a
creditor or creditor’s attorney and the public trustee or sheriff. The public trustee and/or
sheriff may receive and/or store any foreclosure records in an electronic format or by
electronic means. At a foreclosure sale, the public trustee may provide a written copy of
the information that otherwise would be read at the foreclosure sale. Certain fees and
deposits are adjusted. A certificate of purchase or redemption may be assigned by
separate document, rather than by endorsement upon the certificate.
HB 05-1195, Requirement that a Deed Convey Any Interest Held by the Grantor and
Vacated Rights of Way, C.R.S. § 38-30-113
Every deed for real property in the form provided by statute shall be deemed to be
a conveyance of the grantor’s interest, if any, in any vacated street, alley, or right-of-way
that adjoins the real property, unless such transfer is expressly excluded in the deed.
Consistent with this statute, the Colorado Bar Association has approved amendments to
Title Standard 8.3.1.
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